Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation (LO,6-1, LO6-2, LO6-3)During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:Year 1$ 1,037,000595,000442,000302,000140,000Year 2Sales (e 561 per unit)Cost of gooda sold (e $35 per unit)Gross marginSelling and administrative expenses$ 1,647,000945,000702,000332,0004:0318pedNet operating income370,000* $3 per unit variable; $251,000 fixed each year.The company's $35 unit product cost is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead ($352,000 - 22,000 units)$ 61116ncesAbsorption costing unit product cost$ 35Production and cost data for the first two years of operations are:Year 1Year 2Units producedUnita sold22,00017,00022,00027,000Required:1. Using variable costing, what is the unit product cost for both years?2. What is the variable costing net operating income in Year 1 and in Year 2?3. Reconcile the absorption costing and the variable costing net operating income figures for each year.

Under variable costing, Units product cost include variable manufacturing costs such as direct…

Year 1 Sales (e 561 per unit) Cost of gooda sold (e $35 per unit) Gross margin selling and administrative expenses et operating income $ 1,037,000 595,000 442,000 302,000 140,000 Year 2 $ 1,647,000 945,000 702,000 332,000 370,000 3 per unit variable; $251,000 fixed each year. e company's $35 unit product cost is computed as follows: irect materials irect labor arlable manufacturing overhead ixed manufacturing overhead ($352,000 - 22,000 units) bsorption costing unit product cost $ 6 11 16 $ 35 duction and cost data for the first two years of operations are: Year 1 mits produced nita sold 22,000 17,000 Year 2 22,000 27,000

Year 1 Sales (e 561 per unit) Cost of gooda sold (e $35 per unit) Gross margin selling and administrative expenses et operating income $ 1,037,000 595,000 442,000 302,000 140,000 Year 2 $ 1,647,000 945,000 702,000 332,000 370,000 3 per unit variable; $251,000 fixed each year. e company's $35 unit product cost is computed as follows: irect materials irect labor arlable manufacturing overhead ixed manufacturing overhead ($352,000 - 22,000 units) bsorption costing unit product cost $ 6 11 16 $ 35 duction and cost data for the first two years of operations are: Year 1 mits produced nita sold 22,000 17,000 Year 2 22,000 27,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 3BE: Variable costingsales exceed production The beginning inventory is 52,800 units. All of the units...

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